Blair and Brown: ends, means and loopholes

Anatole Kaletsky, always worth reading, launches an Exocet in today’s Times (29 Sept 05) at the socialist belief that health and education are best provided in the public sector and funded out of general taxation, not subject to what some of us see as the largely imaginary benefits of competition and the market (whatever their real benefits in core private sector activities). He credits Tony Blair, in his Brighton Conference speech, with having shed the confusion between ends and means implicit in this belief, defined by Mr Blair as the essence of New Labour, despite Blair’s carefully worded pledges never to allow NHS charges for treatment and never to return to school selection at 11: but he has his doubts about Gordon Brown:

For the Prime Minister there are now almost no taboos about means. He is ready to try whatever it takes to attain his “progressive ambitions”. Health services will increasingly be delivered by private contractors. “I will never allow the NHS to charge for treatment,” he said, but carefully left open the question of privatised treatment providers, or indeed of charges for “hotel services” as opposed to medical treatment, in the NHS. Schools will compete among themselves and seek private sponsors. “I will never return to school selection at 11,” he promised. But was he hinting at the possibility of selection, streaming and setting at 13, 14 or 16, reforms which could offer real hope of achieving the ultimate objective of improving standards of education and behaviour in secondary schools, especially at the lower end of the academic range? For the Chancellor, by contrast, the state control of health and education is still very much a matter of principle. State provision, and above all state financing, of these so-called public services — in reality some of the most personal and private services imaginable — is the remaining bedrock of his socialist beliefs. [My emphasis — BLB]

If Kaletsky is right in this analysis, and especially if he is right in spotting handy loopholes in Blair’s pledges not to impose NHS charges and not to reintroduce schools selection at 11, then in the opinion of this unrepentant socialist, who cares almost as much about means as about ends, the sooner Gordon Brown replaces Tony Blair, the better.

Yes, and yes. I don’t think children should be segregated into different schools, or otherwise educated separately from each other, on the basis of their intelligence or other abilities (which needn’t of course prevent teaching children in some classes in some subjects in separate streams defined by their competence in that particular subject at that particular time). And I don’t think health care (or education, come to that) should be traded for money like bars of soap, or that there should be scope for profit-making institutions, whose primary responsibility by law is to their share-holders and not to the sick, to sell their services to the NHS, even if those who receive services from them don’t have to pay “at the point of delivery”, as they say. And if the government — any government — were to introduce ‘hotel charges’ for NHS patients in hospital, even if accompanied by some kind of contributory insurance scheme that could cover them, we would be well on the way to an NHS which is available for the rich but not for the poor, thus driving a coach and horses through the basic principles of the Health Service as conceived and created by Aneurin Bevan. The Bevan principles are already badly dented by indefensible (and indefensibly high) prescription charges and the costs of NHS spectacles and dentistry, for which we have Hugh Gaitskell to thank; we should be phasing these pernicious charges out, not introducing new ones.

Would it surprise you to know that, in the period of discussion following his report and prior to implementation, Beveridge stated that if the Government used taxation to fund the Welfare State it would suffer from two problems: poor funding and irresponsible use?

Since I am sure you and I would agree with the necessity for social insurance, and yes our welfare system was envisaged to be a form of insurance, do you think that the NHS system is the most appropriate way of delivering healthcare, when it is so poor at doing so?

Brian replies: No, I don’t agree with either Beveridge or yourself about this. I think Bevan was right to reject the insurance principle for the NHS, and I don’t at all accept that the NHS is poor at delivering healthcare or that it would be any better if funded on an insurance basis. Nor do I know of any evidence of widespread abuse of the NHS because of the way it’s funded, or for any other reason. (Anyway, even if there is abuse, an insurance scheme wouldn’t prevent it.) Although other social services are theoretically funded by what is misleadingly called ‘National Insurance’, National Insurance is in practice just one more form of taxation and the level of receipts from it has no bearing on the level of government spending on the social services concerned. If the NHS and the other social services were to be genuinely funded on a true insurance basis, the level of premiums required would be so enormous as to be well beyond the resources of great numbers of ordinary people; the shortfall would have to be topped up out of general taxation, and we’d be back to the existing system but now lumbered with a regressive tax disguised as insurance premiums or contributions. If ever we return to a reasonably progressive tax system (either by much higher marginal rates of tax on very large incomes, or by a flat tax with no allowances but a substantial exemption for lower and even middle incomes), that must be by far the fairest and most equitable way to finance these services. In real life decisions on how much money is spent on the NHS and other social services are always going to be political, not actuarial. Pretending otherwise just masks the reality and misleads the punters. That’s my view, anyway!

Patrick – I’m not sure I understand what distinction you are trying to draw between “social insurance” and a taxpayer-funded service free at the point of use.

Insurance is when a group of people pool resources so that those among them who are unlucky are helped by those among them who are not unlucky.

Presumably social insurance is when these arrangements are provided collectively on a non-voluntary basis? This might be thought desirable to reduce the effects of adverse selection; or for reasons of equity.

What I don’t really understand is how social insurance – non-voluntary contributions out of which the needs of the unlucky are met – is different from general taxation and spending? Are you proposing that there is an advantage in hypothecating part of tax revenue (the “premium”) for a particular set of services (the “claim”)? If so, what is the advantage of ringfencing the finances in that way?

Patrick and Owen: I took the insurance principle to mean that there would be a compulsory insurance scheme with everyone compelled to make at least the minimum contributions as premiums, with add-ons for extra cover: receipts to be funded, i.e. ring-fenced, for the NHS: and patients to pay at the point of delivery, recouping whatever was eligible under the insurance scheme. This would of course restore the old incentive for doctors and hospitals to keep us all sick, instead of having an incentive, as now, to keep us healthy. I entirely agree with Owen that this would have no obvious advantage over the current system, and the one massive disadvantage that I have mentioned, as well as ensuring that over time the NHS would become a two-tier system, one tier for the relatively rich and the other for the rest.

I come to this Kaletsky-prompted debate somewhat late, after just having spent two days in my home town, Huddersfield, with an ageing (80) relative who, after a very nasty fall, has received an avalanche of unremitting NHS attention: first the district nurse, then GP, blood tests in hospital (he was on warfarin), X-rays of badly swollen arm and rib cage, tests and examinations by one A&E doctor and finally by two consultants. (He had a heart attack a few years ago, which they picked up on.) And this isn’t unusual for health care in Kirklees. Everybody there thinks the NHS is great. So, for starters, maybe Mr K ought to get out of London a bit more to see ‘state control’ – as he mischievously calls a state service in a mixed economy – working just as his ‘ordinary people’ like it.
And how can this respected(?) columnist still get away with the old Thatcherite trick of purposley conflating socialism and communism in one part of his article, then conveniently identifying the differences between them (i.e balance between state and private sectors in socialsm) when it suits him further on? He’s just a mischief-maker.
And a patronising one. Talking about ordinary citizens ‘caring passionately’ about having a decent home, reasonable income, proper schooling for the kids, access to a doctor and safe streets, he then proclaims :’ But most citizens care little about how these ends are achieved.’ Oh, really? Most ‘ordinary citizens’ are too dim to care about the political process, are they? The two million who marched against the Iraq war were all part of the metropolitan political elite, then, were they? And the parents in run-down areas recently protesting about the compulsory replacement of their seconday schools by Blair’s city academies ? Read the education sections, Anatole! Catch up! ‘Ordinary People’ are now much better informed than our parents’ generation of ordinary people were, and they know when they are being bulldozed and spun to ( and patronised). Which is partly why they have stopped voting and being politically active; they know that the process, the MEANS, are slowly but surely being taken out of their hands. And they care! Whatever party they belong(ed) to they know that Blair is the chief corrupter of the system which used to involve them.
Perhaps Gordon Brown (if ‘t is he) will have his civil servants and hospital bureaucrats pay more attention to distributing the ‘ends’, because the state-funding ‘means’ of financing the NHS seem to have worked well enough in some areas without Blair’s privatising meddling. Although Mr K again plays the a -word -means -what -I want -it -to -mean trick of labelling Brown as a new Labour moderniser, just like Blair, in the part of the article where he discusses Brown’s speech (..’anyone who who believed that Mr Brown would try to lead a restoration of socialism or old Labour should have been disabused by the time he sat down…’), then tells us later on that GB is still ‘deeply entangled in the old Labour confusion about ends and means’. H’m. Shoddy stuff!
Health Insurance. Owen,Brian. Brian I don’t think the French would agree with you. They like their system, which is insurance-ish. People pay contributions to ‘sécurité sociale’ ( obligatory for those in work ) and SS provides part-reimbursements for money paid to GPs, dentists and private hospitals (state hospital treatment is free). Extra cover and reimbursements are given to those subscribing extra to ‘mutuelles’ (friendly societies, who offer good rates to state employees, of which we know France has hordes). The very poor, without any cover at all, have basic state care (much better than medicare in the US, for e.g, because French state provision is much better). ‘Encourages them to be ill??’ H’m. The French are not alone in Europe in having a much higher ratio of doctors to population than us, from whom they can obviously get treatment much quicker. They know the whole system is getting too expensive for the state to bear, but they don’t want to lose it. Trouble ahead. I still think we can do without this insurance-type basis. And certainly without PFI. Blair obviously doesn’t read Prof Alison Pollock on foundation hospitals! He also doesn’t read the public wish to preserve the NHS as it is very well. The problem with this for us socialists is that it may be the Labour Party which pays the price for his folly. Again.
Education next. Sorry about the length of this, but I felt I had to read the whole of the K article.

I wouldn’t trust Blair’s pronouncements on education for two main reasons ( among many others): First his 1997 proclamation ‘education, education, education ‘ has had little beneficial impact on young people’s lives. On the contrary, confusion and worry about secondary education have actually increased under him, further education has stagnated after a brief period of elevated status when Baronness Helena Kennedy was given the job of FE suprema, and the universities, we know, are in a mess. In fact only junior schools have so far benefited widely and visibly from government money.
Blair’s problem is that he has got himself hooked on offering parents ‘choice’ of secondary school (like the free-marketeer he is). And intrinsic to this choice are the targets met and league table placings achieved – essential details for enabling parents to choose a school. Then come the estate agents pushing up the prices of houses in the catchment areas of successful schools….And so ambitious parents who either couldn’t afford private education or rejected it on principle start elbowing each other to get at the best state schools – exerting the PM’s (socially disruptive and educationally damaging) ‘choice’. He ignores the widespread evidence that people just want a good local school with good teachers capable of getting their children on to the next rung of the ladder, whatever it might be. But this would be too modest a programme for a modernising zealot who totally overlooks, or is ignorant of the fact, that under his Labour government education has become more mechanistic than at any time since the early 20th century.
Young people are increasingly being trained for the economy, not educated. John Dewey and many others would turn in their graves.
‘No more selection at 11’? Easy. Blair can stick to this because his vision for secondary education has already gone way beyond the restoration of the grammar schools (despite his careful ? failure to abolish them when Blunkett promised to do so). Tony is into variety and choice (of which the still extant grammars are an accidental component)! His proposed ‘faith’ schools (ludicrous in a society striving for harmony between races and religions) and his equally ridiculous ‘city academies’ are intended to add to this choice. Some choice! Fork out £2 million (recently reduced to £1 mil), and as the sponsor of a city academy in a poor area you will be able to offer flat earthism along with the national curriculum – and you won’t have to contend with a pushy LEA, because Tony/Ruth will have taken you out of its control.
The bare-facedness with which Blair derided ‘choice for the rich’ in his Brighton speech, whilst saying not a word about where he saw the public schools in the education system, was the sort of thing only he can do – probably without even realising the irony. Any choice he offers poorer people still won’t be the choice of the rich!
But as for the best teaching/learning organisation within a (comprehensive) school, there has never been conclusive evidence – though teaching in mixed ability groups, when done properly, and with an intake from a true income/class-based cross-section of the population, has edged marginally ahead in research papers. (But wait till next week….) The problem has been that comprehensives have had to compete in league tables with selective schools, and so have had to ‘set’ pupils for certain harder subjects like maths and languages and even others. ( But given the different forms of knowledge between subjects or groups of subjects, and the difficulty of teaching/learning some of them, I’m not against setting in the more difficult cases – like maths, languages and physics.)
Brown on education? He just hasn’t said much – nor about much else. So I’m surprised at Kaletsky’s assertion of Gordie’s ‘bedrock socialist belief’ in how education (and health) should be provided. Look at his PFI for the London Underground and his general enthusiasm for big business (like Blair)! Richard Reeves (New Statesman 26th September) says the Left are in for quite a shock if/when the chancellor takes over, pointing, for example, to the speeches he makes to Tribune rallies or the TU conference and then the CBI, with the comment ‘You’d wonder if you’d listened to the same man!’ I admit, I’m worried. But I’d take the risk any day. At least he has a Labour Party pedigree. And he isn’t Tony Blair.

Patrick – I’m not sure I understand what distinction you are trying to draw between “social insurance” and a taxpayer-funded service free at the point of use.

Owen: I apologise for the discourtesy of not having replied sooner. I can do no better than to refer you to a report authored by someone far more knowledgeable about the subject than you or I:

17…a scheme of social insurance against interruption and destruction of earning power and for special expenditure arising at birth, marriage or death. The scheme embodies six fundamental principles : flat rate of subsistence benefit ; flat rate of contribution ; unification of administrative responsibility; adequacy of benefit ; comprehensiveness ; and classification.

24…It is described as social insurance to mark important distinctions from voluntary insurance. In the first place, while adjustment of premiums to risks is of the essence of voluntary insurance, since without this individuals would not of their own will insure, this adjustment is not essential in insurance which is made compulsory by the power of the State. In the second place, in providing for actuarial risks such as those of death, old age or sickness, it is necessary in voluntary insurance to fund contributions paid in early life in order to provide for the increasing risks of later life and to accumulate reserves against individual liabilities. The State with its power of compelling successive generations of citizens to become insured and its power of taxation is not under the necessity of accumulating reserves for actuarial risks and has not, in fact, adopted this method in the past. The second of these two distinctions is one of financial practice only ; the first raises important questions of policy and equity. Though the State, in conducting compulsory insurance, is not under the necessity of varying the premium according to the risk, it may decide as a matter of policy to do so.

26…In accord with that view, the proposals of the Report mark another step forward to the development of State insurance as a new type of human institution, differing both from the former methods of preventing or alleviating distress and from voluntary insurance. The term “social insurance” to describe this institution implies both that it is compulsory and that men stand together with their fellows. The term implies a pooling of risks except so far as separation of risks serves a social purpose. There may be reasons of social policy for adjusting premiums to risks, in order to give a stimulus for avoidance of danger, as in the case of industrial accident and disease. There is no longer an admitted claim of the individual citizen to share in national insurance and yet to stand outside it, keeping the advantage of his individual lower risk whether of unemployment or of disease or accident.

I accept Thersites’s demonstration that by many, perhaps most, measurements the UK’s performance in health care compares badly with those of most other comparable European countries. But I don’t recognise a causal link between that and the system we use for financing the NHS. Thersites acknowledges, it seems to me rightly, that —

It is difficult to assess the effectiveness of health-care systems and any rankings produced must be accepted with important caveats: the ranking is only partly due to the method of health-care provision and it is difficult to be prescriptive about how to improve it from the scores of the other health-care systems so measured.

Consistent under-funding of the NHS by successive governments over many years seems the obvious villain here, perhaps along with the failure to set up any kind of investment or other fund to cover future expenditure needs, although I’m not convinced that this necessarily makes sense in the case of government fiscal arrangements. The key point surely is that there’s no material difference between the two rival systems for financing public health: (a) ‘social insurance’ based on compulsory premiums or contributions at levels set by government without necessarily, or usually, any actuarial relationship between contributions and ‘risk’: and (b) financing all current expenditure, including capital investment, from current taxation. Either system is liable to lead to under-funding if governments are basically indifferent, or even hostile, to public services, and/or if they take a blinkered and short-term view of their responsibilities to society, generally beneficial in electoral terms (because it permits reductions in taxation) but deeply harmful in the longer term, especially to the most vulnerable. Governments may also be virtually forced into short-termism and under-funding of public services by economic and fiscal problems, either beyond their own control or arising from poor management of the nation’s finances. Either way, it’s the rich wot gets the decent services by paying for them, and the poor wot gets the blame (and lousy services).

I’m not convinced either about the extent of abuse of the NHS. Of course many GPs (although by no means all) will eagerly quote examples of abuse, but so will any provider of services in either the private or the public sectors. All state benefits provided either free or subsidised at the point of use will be more or less vulnerable to a degree of abuse. In the case of the NHS, sensible GPs and hospitals know how to deal with it in such a way as to limit the waste of resources it entails. But the question should be, not whether and if so at what level does abuse exist?, but what is the alternative? The only way to eliminate abuse is presumably to require users of services to pay their full economic cost at the point of use, perhaps alleviated to some extent by a ‘poor law’ system or safety-net for the seriously poor — the system that we had before the NHS. I regard that as a wholly unacceptable and disproportionate price to pay for eliminating a degree of abuse which seems to me to be relatively unimportant, the lesser evil on almost any measurement.

A quick reply to your last point about the system prior to the NHS. The ‘Poor Law’ system was designed, as I’m sure you are aware, to mainly provide social care.

To take GP services as an example: in the 1890s 20% were free, 75% contributary based (friendly societies, charities, unions, employers & provident dispensaries) and 5% fee-based. By 1939: 40% of the population had compulsory insurance, free services less than 5% and the remainder contributary-based or fees (Green, D. Medical Care Without the State).

Contrary to popular belief, there was an adequate (for the time) health-care system that could have been improved upon Beveridge-type lines, not wiped out by Bevan.

I’m sure you are correct in the assumption that under funding is the main cause of the relative poor performance of our health-care system. However, what I was trying to show was that the nature of our health-care funding is the main cause of the under-funding. Beveridge was correct to warn precisely about this at the inception of the NHS. There are no short-cuts to good health-care provision, one needs adequate funding allied to an efficient system of provision. Prior debate on the NHS has been defused by the supposed equitable nature of provision and that it’s the best system in the world.

The NHS is not equitable or good, just cheap and, in the past, efficient. Presumed equity does not excuse its failings: the argument that poor provision is acceptable (we all suffer together) because it is equitable is risible.

It was a pleasant surprise to hear you on Broadcasting House this morning while typing this reply.

The NHS is the most visible part of the Welfare State and the most respected, having been set-up almost sixty years ago as part of the post-war settlement by the Labour government led by Clement Attlee (1883–1967). At that time, with Britain ha…